Broadcasters Sue Locast, With Copyright Exemption Key Issue

Broadcast network efforts to shut down Locast with a copyright infringement suit filed Wednesday in federal court will likely involve how nonprofit the nonprofit streaming service actually is, and what the Section 111 exemption of the Copyright Act applies to, broadcast and copyright experts told us.

Locast -- which captures local live TV broadcast signals and streams them -- and allies said Section 111 exempts secondary retransmission by nonprofits (see 1907110041), but that was intended for nonprofit boosters "and this is not anywhere near where that is," said broadcast lawyer Jack Goodman. The court might also look askance at the nonprofit claims, considering AT&T's $500,000 donation to Locast and interruptions to viewers' streams every 15 minutes unless they subscribe with a donation, said intellectual property lawyer Brett Trout.

Goodman said the Supreme Court's 2014 Aereo decision will play a role in this, as it interprets the same section of law, though not exactly the same situation. In that, the court decided Aereo was publicly performing copyrighted works in violation of the Copyright Act. "This is almost Aereo light," raising similar business issues, said St. Thomas University copyright law professor Ira Nathenson.

"Locast is not the Robin Hood of television," when its funding and operations show "decidedly commercial purposes," the broadcaster plaintiffs said in the docket 19-cv-7136 complaint filed Wednesday in U.S. District Court in Manhattan. It said Locast started with "a sizable loan" from a former Dish Network executive (with Locast operator David Goodfriend, also a former Dish executive). The broadcasters said Locast is a complement to Dish's and Goodfriend's lobbying efforts on retransmission consent. It said Locast takes out Nielsen watermarks from the over-the-air broadcasting signals it captures.

The plaintiffs include ABC, Disney, CBS, Fox TV Stations, Fox Broadcasting, NBCUniversal Media and Universal TV. They seek unspecified damages and a permanent injunction; it doesn't ask for a preliminary or temporary injunction. Defendants are Goodfriend and his Sports Fans Coalition, a nonprofit advocacy group that says its runs Locast as a "chapter."

"The only serious argument" the broadcasters have is that Locast is a shell company for AT&T and Dish, and it's not clear whether that will stick, emailed Blake Reid, associate clinical professor of technology law at University of Colorado-Boulder. Locast "has a good argument" it qualifies for the Section 111 exemption, he said. He said broadcasters had a stronger argument that the exemption doesn't apply to cable systems but couldn't because Aereo tried to assert it was a cable system so it could pay the compulsory license fee but broadcasters "pushed back very hard on that." He said the Section 111 provision is straightforward, and broadcaster arguments "read more like sour grapes than serious legal challenges."

The law "is crystal clear that nonprofits can retransmit free over-the-air broadcast signals to Americans without incurring copyright liability," said Georgetown Law Institute for Technology Law & Policy's Gigi Sohn. "But the big, wealthy national broadcast networks that get free use of the public’s airwaves" are more interested in profits than in citizens' access to broadcast TV, she said. The substantive question in the case is what is copyright infringement, and copyright law shouldn't view as public performance transmissions that are already “free as air,” emailed University of San Diego law professor Orly Lobel, saying antennas -- including antenna enhancement -- don't infringe.

Goodman said the case could have implications for MVPDs trying to avoid paying for retrains signals by obtaining them indirectly. Trout said regardless of how the court case plays out, there could be heavy lobbying from all sides to clarify the applicable section of the Copyright Act to address the current technological framework.

NAB said it "wholeheartedly backs" the litigation. "This firm is thinly disguised as a not-for-profit entity that mirrors failed predecessors Aereo and FilmOn in its bid to legitimize the theft of local TV broadcast signals," it said. Locast "is all about gaining a commercial advantage for its backers ... to the detriment of local broadcast TV viewers."

Lawyers said the AT&T donation and Locast's expansion into 13 markets might have crossed a Rubicon for broadcasters. Since its start in early 2018, "all of a sudden Locast isn't so piddling little anymore," said broadcast lawyer Peter Tannenwald of Fletcher Heald, especially with AT&T's DirecTV and U-verse having integrated Locast into their guides. He said broadcasters might also have been more focused on issues like renewing the Satellite Television Extension and Localism Act. And letting it go on longer might have provided Locast with a laches defense, he said.

Trout said cord-cutting has made TV watchers increasingly comfortable with getting out of one service and booting up the app for another -- which would have been a tougher sell a decade ago. Now there's "no downside" to suing, he said. The "heavy hitters" behind both Locast and the litigation point to a significant business proxy fight, Nathenson said.

Locast said it's an independent, nonprofit organization providing a public service retransmitting free over-the-air broadcasts, and that its activities "are expressly permitted under the Copyright Act." "That no broadcasters have previously filed suit for more than a year and a half suggests that they recognize this," it said, vowing to defend itself.